Sometimes the cure is worse than the ill: an occasional look into the life of LSE DESTIN 2010

The state “capability trap”: how it happens and what we can do about it

There is general consensus that one of the fundamental dimensions of development is the building of the administrative capacity of the state to perform its basic functions i.e. to ensure security, rule of law, taxation, and delivery of essential services such as health care. There is a problem with the building of states’ capability: it takes a long, long, long time to come about. In a recent paper, Lans Pritchett and colleagues ask the question: how long it would take each country to reach Singapore’s measured level of capability at an estimate of its long-run pace of progress? (the assumption is that each country at independence had the same capability of Somalia today. Hence the maximum pace of progress is calculated as today’s capability minus Somalia’s capability divided by the years since independence). This is what they found:

Of the 95 countries for which we have data on all three of these indicators, we can see that there is a substantial fraction of states that are at extremely low levels of capability; if they continue their long-run trajectories they will attain high capability in centuries, if not millennia. (..)

Haiti, for example, gained its independence in 1804 and so has had 204 years of independence in which it has reached a KKM government effectiveness rating of 2.4 by 2008. To make it to Singapore‘s level would require a gain of 7.6 points (to 10); hence, at a progress of 2.4 points per 200 years, it will take over 600 years to reach that level of capability.

The next question is how countries get stuck in this capability trap despite the effort of external agencies to promote these capabilities. One explanation that the authors advance is that external agencies ask fragile states too much too soon too often. An excessive and premature burden posed on the administrative system of a state can stress its capability to deliver any service and cause it to weaken.

So if one thinks that the weaker the institutions the smaller the demand should be to deliver services, what are the policy implications? Economist Subramanian offers one example in the case of Haiti: instead of routing aid through the Haitian government, direct cash transfer to Haitian people and the provision of cell-phones would be more meaningful interventions in the aftermath of the earthquake.